Ministry plans holding firm for Bhutan projects

New Delhi: As part of its effort to strengthen political and economic ties with Bhutan, India plans to form a holding company to undertake hydropower development there.

State-run power firms are planning to develop four projects in Bhutan with a combined capacity of 3,000MW to harness the country’s hydroelectric potential and enhance India’s strategic influence in the region.

“There will be a company to oversee the hydropower development in Bhutan. The companies which are planning to develop projects there should go for a holding company as it will help in efficient government-to-government deliberations regarding the projects,” said H.S. Brahma, union power secretary.

NHPC Ltd, NTPC Ltd, Tehri Hydro Development Corp. Ltd and Satluj Jal Vidyut Nigam Ltd plan to develop the projects through joint ventures, and import the bulk of the power generated back to India, as reported by Mint on 22 March.

Around 90% of the electricity generated through these projects will be brought back to India to meet the country’s growing energy demand. India has a peak power shortage of around 12%.

However, project developers are not enthused by the power ministry’s approach.

“If this (one holding company for all projects) happens, then managing day-to-day affairs of the projects will become very unwieldy,” said a chief executive at one of the state-owned firms, who did not want to be identified.

India has increased its energy diplomacy in the neighbourhood and has also been trying to engage countries such as Myanmar, Bangladesh and Sri Lanka to counter the growing Chinese influence.

Bhutan, which is strategically located between India and China, is estimated to have the potential to generate 30,000MW of hydropower, but has an installed capacity of just 1,490MW. While India has the potential to generate 300,000MW, only around 145,000MW of it is exploitable. The country has a hydropower generation capacity of 36,085MW and plans to add 15,627MW by 2012.

India already has power-grid links with Bhutan and has helped it develop the Tala and Chukha projects. Electricity sale is the primary source of revenue for Bhutan. In order to harness its full hydropower potential, the two countries signed an agreement in July 2006 to facilitate, encourage and promote the development and construction of hydropower projects and associated transmission systems, as well as trade in electricity.

“The proposal for a holding company for all hydropower assets in Bhutan is a smart idea. It will work as dealing with the Bhutan government will become easier and help in preparing the ground work for the proposed projects,” said Rupesh Sankhe, an equity research analyst at Angel Broking Ltd.

“We have a peak power deficit of 12% and, in a situation like this, hydropower projects will help in meeting the demand,” Sankhe added.

India has an agreement with Bhutan to import 5,000MW of power by 2020, of which around 1,400MW is already being bought.